US regulators are expected to file up to 100 lawsuits against executives and directors of bailed-out banks in the next two years, as they seek to hold people accountable for management failings and recover billions of dollars, industry experts said.
The Federal Deposit Insurance Corporation is only now beginning to step up its efforts to make an example of overly aggressive executives or inattentive directors of the 348 banks that have failed since 2008. The failures have cost the FDIC’s insurance fund $59bn. Analysis by Nera Economic Consulting of material on the FDIC’s website suggests it has lost $80bn.
Insurers who write policies known as D&O, which are held by directors and officers to protect them in the event of a bank failure, are likely to be liable for much of the money the FDIC aims to recover. Many have tightened up their terms, making it difficult for the 884 banks that remain on the group’s watch list to renew cover.